Scandinavian Tobacco Group (STG) reported net sales of DKK1.96 billion ($285.53 million) in the first quarter of 2023, up 1.3 percent from the comparable 2022 period. EBITDA before special items was DKK474 million with an EBITDA margin of 24.1 percent.
During the quarter, STG completed the acquisition of Alec Bradley, a leading player in the U.S. handmade cigar category. In April 2023, following the close of the quarter, the company announced the acquisition of XQS, a brand active in Sweden within the next-generation product category space.
While still struggling with uncertainties relating to consumer behavior, the company expects year-on-year impacts from inflation to decline over the coming quarters. “Consumer demand for handmade cigars in the U.S. in the quarter is still perceived as resilient, although volume declines remained above its structural decline trend as overflow from the exceptionally strong two years during the pandemic trails off,” the company wrote in a statement.
“STG remains on track to deliver on the 2023 guidance with results for the first quarter being up against strong comparisons in 2022,” said CEO Niels Frederiksen. “We have stabilized our production issues, but we are still recovering from this impact as well as cost inflation into 2023, affecting margins negatively. The group is making good progress on our ambition to grow the size of the company with two transactions announced within the last few months.”